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4/27/11

Apple (AAPL) and Google (GOOG) have been accused of collecting and storing user information, including location data. Lawsuits are on the way while politicians and attorneys general demand answers.

While Apple has so far remained mum on the matter, it's been reported that an Apple engineer filed a patent application entitled "Location Histories for Location Aware Devices," which describes some of the uses of collecting location data. These include transmitting location information over the internet, creating a searchable map that shows the user's location history, and tying location data to financial transactions. So iPhones storing the data is probably not a bug.

If you are interested in reading the patent application, you can find it here (or here if you have Quicktime installed).

I'm glad that this has finally captured the public's attention, but cellphones have been tracking our locations for a long time. For instance, from the NY Times:

Mr. Spitz went to court to find out exactly what his cellphone company, Deutsche Telekom, knew about his whereabouts.
The results were astounding. In a six-month period — from Aug 31, 2009, to Feb. 28, 2010, Deutsche Telekom had recorded and saved his longitude and latitude coordinates more than 35,000 times. It traced him from a train on the way to Erlangen at the start through to that last night, when he was home in Berlin.

The police seem to be enjoying all the data that cellphones collect, downloading it during traffic stops.

For at least five years now, the authorities have been able to remotely activate a cellphone's microphone in what is called "a roving bug," allowing them to eavesdrop on people whose phones aren't in use. It sounds like a conspiracy theory, but according to ZDNet

Nextel cell phones owned by two alleged mobsters, John Ardito and his attorney Peter Peluso, were used by the FBI to listen in on nearby conversations.

It's time for the industry (or congress, as a second best choice) to develop comprehensive privacy rules for the digital age. The more protections, the better. People should at least be able to opt out of having their data collected, and the police should be prevented from accessing information stored on electronic devices without first obtaining a warrant. Not only does it concern privacy (not too long ago considered a basic right), it is also a security issue.

4/25/11

Gold is making new nominal highs almost daily. Silver, meanwhile is making 30 year highs. Prices at the pump are soaring, despite an oversupply of oil. The latter is only partly explained by ongoing Middle East turmoil and refinery retooling in preparation for the summer driving season. Anyone who eats has no doubt noticed that food prices are going up while the packages that food comes in are shrinking.

"Panic dollar selling is setting in," hedge fund manager Dennis Gartman says. "This may carry farther than any of us dream of or, worse, have nightmares of." In the race to the bottom, the dollar is ahead of the pack.

US finances are in terrible shape. The federal deficit is almost 10% of GDP, and total debt if you include Social Security, Medicare, and Medicaid is about $75 trillion, five times greater than GDP. "It is a testament to the delusion--and plain dishonesty--which surrounds America's fiscal debate that this figure is not more widely cited," writes Liam Halligan for The Telegraph.

In response, during a recent summit the leaders of Brazil, Russia, India, China and South Africa (the BRICS) announced that they want to trade between themselves in their own currencies. This comes amid a growing chorus in China pushing for a limit of dollar reserves to 1.3 trillion. At present, China, whose economy the IMF says will outpace that of the US by 2016, has 3.04 trillion in dollar reserves. What's going to happen to the dollar when China sells off $1.74 trillion? And who, besides the Federal Reserve, is going to buy our bonds?

A put is an option contract that gives its owner the right to sell the put writer an underlying asset for a set price within a certain time. If one owns the underlying asset, buying puts on that asset is like buying insurance. One can also buy puts to make a downside bet on an asset. The put writer, on the other hand, is selling insurance or betting that the underlying asset will not fall below the set price within the time frame specified in the contract.

If the Federal Reserve is selling puts on Treasuries, and there's reason to believe that it is because it did just that during the Y2K non-crisis, it is selling insurance on US debt. This is pretty much the same thing that AIG did. The only difference is that the Federal Reserve has a printing press and AIG did not. The Fed can't default, but if rates go above its target strike prices, the Fed will have to print so much money that the currency will collapse.

And a collapse is due. Since the latter half of the 19th century, the world has had four monetary orders. The past three have lasted between 20 and 44 years, or 30 years on average. Our current fiat, faith based system is 40 years old. Add to this the Federal Reserve's money printing and Washington's "openness" to a new global reserve currency.

Maybe they are commodities in a bubble as many suggest, but gold and silver, for thousands of years regarded as money, appear to be remonetizing. Talk of a new gold or other asset backed monetary system is all the rage in the blogosphere while central banks and large university endowments are taking physical delivery of the shiny metal. While it was certainly better to have begun doing so during the last ten years, maybe regular people should start doing this too.

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